PUBLIC REPORT OF THE MARKET CONDUCT EXAMINATION

OF THE CLAIMS PRACTICES OF THE

BANKERS LIFE AND CASUALTY COMPANY

NAIC # 61263 CDI # 2254-1

AS OF JANUARY 31, 2005

STATE OF CALIFORNIA

DEPARTMENT OF INSURANCE

MARKET CONDUCT DIVISION

FIELD CLAIMS BUREAU

TABLE OF CONTENTS

SALUTATION.......................................................................................1

SCOPE OF THE EXAMINATION...............................................................2

CLAIMS SAMPLE REVIEWED AND OVERVIEW OF FINDINGS......................3

TABLE OF TOTAL CITATIONS.................................................................5

TABLE OF CITATIONS BY LINE OF BUSINESS...........................................6

SUMMARY OF RESULTS.........................................................................8

STATE OF CALIFORNIA	John Garamendi,	Insurance Commissioner
DEPARTMENT OF INSURANCE
Consumer Services and Market Conduct Branch Field Claims Bureau, 11th Floor 300 South Spring Street Los Angeles, CA 90013

June 15, 2006

The Honorable John Garamendi

Insurance Commissioner

State of California

45 Fremont Street

San Francisco, California 94105

Honorable Commissioner:

Pursuant to instructions, and under the authority granted under Part 2, Chapter 1, Article 4, Sections 730, 733, 736, and Article 6.5, Section 790.04 of the California Insurance Code; and Title 10, Chapter 5, Subchapter 7.5, Section 2695.3(a) of the California Code of Regulations, an examination was made of the claims practices and procedures in California of:

Bankers Life and Casualty Company

NAIC # 61263

Group NAIC # 0233

Hereinafter referred to as BLCC, the Company.

This report is made available for public inspection and is published on the California Department of Insurance web site ( www.insurance.ca.gov) pursuant to California Insurance Code section 12938.

SCOPE OF THE EXAMINATION

The examination covered the claims handling practices of the aforementioned Company during the period February 1, 2004, through January 31, 2005. The examination was made to discover, in general, if these and other operating procedures of the Company conform with the contractual obligations in the policy forms, to provisions of the California Insurance Code (CIC), the California Code of Regulations (CCR), the California Vehicle Code (CVC) and case law. This report contains only alleged violations of Section 790.03 and Title 10, California Code of Regulations, Section 2695 et al. The alleged violations of other relevant laws which resulted from this examination are included in a separate report which will remain confidential subject to the provisions of CIC Section 735.5.

To accomplish the foregoing, the examination included:

1. A review of the guidelines, procedures, training plans and forms adopted by the Company for use in California including any documentation maintained by the Company in support of positions or interpretations of fair claims settlement practices.

2. A review of the application of such guidelines, procedures, and forms, by means of an examination of claims files and related records.

A review of consumer complaints received by the California Department of Insurance (CDI) in the most recent year prior to the start of the examination.

The examination was conducted at the California Department of Insurance office in Los Angeles, California.

The report is written in a "report by exception" format. The report does not present a comprehensive overview of the subject insurer's practices. The report contains only a summary of pertinent information about the lines of business examined and details of the non-compliant or problematic activities or results that were discovered during the course of the examination along with the insurer's proposals for correcting the deficiencies. When a violation is discovered that results in an underpayment to the claimant, the insurer corrects the underpayment and the additional amount paid is identified as a recovery in this report. All unacceptable or non-compliant activities may not have been discovered. Failure to identify, comment on or criticize activities does not constitute acceptance of such activities.

Any alleged violations identified in this report and any criticisms of practices have not undergone a formal administrative or judicial process.

CLAIM SAMPLE REVIEWED AND OVERVIEW OF FINDINGS

The examiners reviewed files drawn from the category of Closed Claims for the period February 1, 2004, through January 31, 2005, commonly referred to as the "review period". The examiners reviewed BLCC claim files. The examiners cited 9 claim handling violations of the Fair Claims Settlement Practices Regulations and/or California Insurance Code Section 790.03 within the scope of this report. Further details with respect to the files reviewed and alleged violations are provided in the following tables and summaries.


Bankers Life and Casualty Company
LINE OF BUSINESS / CATEGORY	CLAIMS FOR REVIEW PERIOD	REVIEWED	CITATIONS
Life/Individual Life	266	35	4
Annuity/Life Annuity	128	31	4
Accident And Health/Long Term Care/Home Health Care	15,227	41	0
Accident And Health/Short Term Care	535	38	1
Accident And Health/Major Medical,Hospital Surgical & Medical Surgical	280	36	0
Accident And Health/Bankers Life And Dread Disease	9	3	0
Accident And Health/Disability Income	712	39	0
Accident And Health/Accident	7	2	0
Accident/Hospital Indemnity	76	19	0
TOTALS	17,240	244	9


TABLE OF TOTAL CITATIONS
Citation	Description	BLCC
CCR §2695.5(e)(1)	The Company failed to acknowledge notice of claim within 15 calendar days.	4
CCR §2695.7(b)(3)	The Company failed to include a statement in its claim denial that, if the claimant believes the claim has been wrongfully denied or rejected, he or she may have the matter reviewed by the California Department of Insurance.	1
CCR §2695.3(b)(2)	The Company failed to record in the file the date the Company received, date the Company processed and date the Company transmitted or mailed every relevant document in the file.	1
CCR §2695.4(a)	The Company failed to disclose all benefits, coverage, time limits or other provisions of the insurance policy.	1
CCR §2695.3(a)	The Company's claim file failed to contain all documents, notes and work papers that pertain to the claim.	1
CCR §2695.7(c)(1)	The Company failed to provide written notice of the need for additional time every 30 calendar days.	1
Total Citations		9


TABLE OF CITATIONS BY LINE OF BUSINESS
LIFE/INDIVIDUAL LIFE	NUMBER OF CITATIONS
CCR §2695.5(e)(1)	1
CCR §2695.7(c)(1)	1
CCR §2695.4(a)	1
CCR §2695.7(b)(3)	1
SUBTOTAL	4

ANNUITY/ANNUITY LIFE	NUMBER OF CITATIONS
CCR §2695.3(b)(2)	1
CCR §2695.5(e)(1)	1
CCR §2695.3(a)	1
CCR §2695.5(e)(1)	1
SUBTOTAL	4

ACCIDENT AND HEALTH/LONG TERM CARE & HOME HEALTH CARE	NUMBER OF CITATIONS
SUBTOTAL	0

ACCIDENT AND HEALTH/SHORT TERM CARE	NUMBER OF CITATIONS
CCR §2695.5(e)(1)	1
SUBTOTAL	1
ACCIDENT AND HEALTH/MAJOR MEDICAL, HOSPITAL SURGICAL & MEDICAL SURGICAL	NUMBER OF CITATIONS
SUBTOTAL	0
ACCIDENT AND HEALTH/DREAD DISEASE	NUMBER OF CITATIONS
SUBTOTAL	0
ACCIDENT AND HEALTH/DISABILITY INCOME	NUMBER OF CITATIONS
SUBTOTAL	0

ACCIDENT AND HEALTH/ACCIDENT	NUMBER OF CITATIONS
SUBTOTAL	0
ACCIDENT AND HEALTH/HOSPITAL INDEMNITY	NUMBER OF CITATIONS
SUBTOTAL	0

TOTAL	9

SUMMARY OF RESULTS

The following is a brief summary of the criticisms that were developed during the course of this examination related to the violations alleged in this report. This report contains only alleged violations of Section 790.03 and Title 10, California Code of Regulations, Section 2695 et al. In response to each criticism, the Company is required to identify remedial or corrective action that has been or will be taken to correct the deficiency. Regardless of the remedial actions taken or proposed by the Company, it is the Company's obligation to ensure that compliance is achieved. There were no recoveries discovered within the scope of this report.

INDIVIDUAL LIFE

1. In one instance, the Company failed to acknowledge notice of claim within 15 calendar days. The Department alleges this act is in violation of CCR §2695.5(e)(1).

Summary of Company Response: It is the Company's procedure to acknowledge notice of claims. On March 1, 2006 the Company sent notices to all agents, managers and administrators to remind them to immediately notice the Home Office upon receipt of a death notification. The Company also provided re-training on this issue for the Company's customer service representatives.

2. In one instance, the Company failed to provide written notice of the need for additional time every 30 calendar days. The Department alleges this act is in violation of CCR §2695.7(c)(1).

Summary of Company Response: It is the Company's procedure to provide written notice of the need for additional time every 30 calendar days. On April 7, 2006 the Company provided re-training on this issue for the customer service representatives. The Company created a standardize form to help the customer service representative meet this requirement.

3. In one instance, the Company failed to disclose all benefits, coverage, time limits or other provisions of the insurance policy. The Department alleges this act is in violation of CCR §2695.4(a).

Summary of Company Response: The individuals involved have been made aware of these compliance issues. April 7, 2006 the Company created a standardize form to help the customer service representative meet this requirement.

4. In one instance, the Company failed to include a statement in its claim denial that, if the claimant believes the claim has been wrongfully denied or rejected, he or she may have the matter reviewed by the California Department of Insurance. The Department alleges this act is in violation of CCR §2695.7(b)(3).

Summary of Company Response: The Company acknowledges that the denial language had not been included. On February 21, 2006 the Company issued a training memo to the staff to require them to provide this information in the denials.

ANNUITY

5. The Company failed to properly document claim files. In one instance, the Company's file failed to contain all documents, notes and work papers. The Department alleges this act is in violation of CCR §2695.3(a).

Summary of Company Response: The Company acknowledges that the date they received notice of claim had not been included in the claim file. On February 21, 2006 the Company issued a training memo to the staff to remind them to document the claim file with all activity.

6. In one instance, the Company failed to record claim data in the file. This instance is the result of a failure to record the date the Company received written communication from an insured. The Department alleges this act is in violation of CCR §2695.3(b)(2).

Summary of Company Response: The Company acknowledges that the file activity had not been included in the claim file. On February 21, 2006 the Company issued a training memo to the staff to remind them to document the claim file with all activity.

7. In two instances the Company failed to acknowledge notice of claim within 15 calendar days. The Department alleges these acts are in violation of CCR §2695.5(e)(1).

LONG TERM CARE & HOME HEALTH CARE